Soluna Holdings, Inc. Common Stock 2026 Q2 Earnings Call

Mike, please go ahead. Good afternoon, and thank you for joining Soluna's second quarter 2026 earnings call.

Our earnings release and the accompanying presentation are available in the investor relations section of solunacomputing.com. This call is being webcast with the presentation. With me today are John Belizaire, Chief Executive Officer, Ryan Carver, Chief Development Officer, and Michael Pecci, Chief Financial Officer. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements.

For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics.

We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors in our annual report on Form 10-K for the year ended December 31st, 2025, and our other SEC filings. One note before we begin, effective this quarter, we changed the presentation of passthrough electricity costs from a net basis to a gross basis. That change increases both reported revenue and reported cost of revenue by the same amount, and thus has no effect on gross profit, operating loss, or net loss. Every affected slide is footnoted, and Mike will walk through the mechanics. With that, I'll turn it over to John.

Thanks, Mike Tu. Hello, and welcome to Soluna's second quarter results and business update. This is our first quarterly earnings webcast, and we are glad to have you all here. Let me start with the thesis because everything else today sits underneath it. Power is the primary constraint in the AI era, not chips, not capital, power, and how quickly you can reach it. Soluna has secured long-term, behind-the-meter access to power at scale, and we convert that access into contracted data center flows and data center cash flows by building directly on the site of renewable generation with stranded power by bypassing long grid queues. Four numbers frame where we stand today. Revenue grew 145% year-over-year, our fifth straight quarter of sequential growth. We have 192 megawatts of capacity under management, a proven cash-generating operating base, and we expect that to increase this summer to 206 megawatts.

We have over 650 megawatts across two AI campuses in development at Kati 2 and Dorothy 3, both on track to secure leases and construction. Our renewable power pipeline grew 47% this year to over 6.3 gigawatts. The scarce input for AI sourced all behind-the-meter. Let me spend a moment on the second and third of those because this is the quarter they connected. We like to say power is the asset and compute follows, and that is the Soluna way. In the second quarter, we took it all the way through at Project Dorothy. On April 1st, we closed the acquisition of the 150-megawatt Briscoe Wind Farm. On April 15th, we acquired Spring Lane Capital's interest in Dorothy I-A. On May 19th, we acquired Navitas' interest in Dorothy I-B. Soluna now owns the generation and the compute across all 50 megawatts of Project Dorothy I.

Everyone in this industry is racing to secure power right now, signing PPAs, taking queue positions, negotiating with utilities for capacity that shows up in 2029. We acquired the wind farm. So when a hyperscaler or Neocloud customer performing diligence on one of our sites asked two questions that decide everything, "How fast can you get me power?" and "What is my energy cost?" We answer both with an asset we own outright. That model produces five revenue streams, and the mix is shifting deliberately. Hosting for Bitcoin miners is our largest business today. We build and operate the data center. Creditworthy mining companies bring the machines, and that is the driver of our revenue. Proprietary Bitcoin mining is our own fleet. We sell daily and hold no treasury.

Grid ancillary services pay us to be flexible, interruptible load, and we are compensated for acting as behind-the-meter flexible load for the grid operator. Soluna Wind is our new addition this quarter, on-site wind generation at Briscoe with ERCOT substation and grid interconnection. Of course, AI high-performance computing Colocation and hosting for companies that need AI-ready capacity is where this company is going. That is the segment Ryan was hired to build. Everything we are doing this year sits under four priorities. First, develop AI. Advance Kati 2 and Dorothy 3 to shovel-ready and tenant-ready, and build a pipeline of AI-ready campuses designed for rapid deployment. Next is optimizing our projects. We are focused on energizing and ramping Kati 1, and driving profitability across the operating fleet through uptime, operational efficiency, and disciplined cost management. Next is capital formation. We intend to fund pipeline growth and AI development through project-level financing and strategic capital partnerships while maintaining balance sheet flexibility.

Finally, we are focused on growing our pipeline. As I said earlier, we reached 6.3 gigawatts this quarter, with more than 300 megawatts of the growth coming from expanded term sheets at four sites already in our portfolio. I want to say something about capital formation because it is a question I get most. We raised $159.4 million in the second quarter, and an additional $23.6 million on our ATM program since quarter-end, issuing about 18.8 million shares. Here is what that accomplished: 100% ownership to Project Dorothy 1, a 150-megawatt wind farm, the Kati 2 joint venture and land for Dorothy 3, and a clean capital structure. We retired the Series B entirely this quarter and paid out the accumulated dividends.

Every dollar of that went into assets that are now on the balance sheet today. Going forward, the large AI builds are designed to be funded predominantly with project-level debt, collateralized by the data center and underwritten against contracted tenant cash flows. Mike Pecci will take you through that structure. Let's get into the quarter. On the business side, four things. We were added to the Russell 3000 and Russell 2000 indices in the latest reconstitution, and new sell-side research coverage has been initiated on the company in recent weeks. Together with more formal quarterly communications you are seeing today, these reflect a deliberate effort to elevate Soluna's visibility and accessibility to institutional investors. We closed a $53 million acquisition of Briscoe Wind Farm on April 1st, as I mentioned, and it is our first direct ownership of a renewable generation asset.

We consolidated 100% of Project Dorothy 1A and 1B, strengthening the path toward Dorothy 3, our new AI campus. On the project side, our teams delivered across all four campuses. Kati 2 reached a definitive joint venture with Metrobloks, completed design development, and signed a tenant letter of intent. Dorothy 3 secured a definitive land purchase agreement and advanced utility coordination. Kati 1 completed substantial construction, and Dorothy 1A and Sophie held capacity through a heavy summer curtailment window. Ryan will take you through the AI project highlights in detail shortly. Now I'd like to talk about the pipeline, which is our core asset. As of August 1st, the total pipeline is approximately 6.3 gigawatts. That is up from 4.3 gigawatts earlier this year, and I want you to see how it is structured. 192 megawatts is operating, energized, and generating revenue today.

14 megawatts is under construction, the final phase of Kati 1. We expect this will take us to 206 megawatts operating by the end of the summer. Approximately 1.6 gigawatts is in planning and development, where PPA negotiations, ERCOT planning, AI feasibility work, and land acquisition activities are underway. Approximately 4.5 gigawatts is in assessment with our power partners. One more piece of the model. Our behind-the-meter structure keeps our data centers flexible. We can draw power from the renewable plant and from the grid, and we can provide ancillary services back to the grid. That flexibility is what gives us rapid time to interconnection. We will cluster. We plan to use multiple generation assets in proximity to a single data center site, which is how a footprint that would otherwise support a fraction of the capacity becomes a 300-megawatt campus.

We are using that approach at Kati 2 and Dorothy 3, and you will see it in our other sites. Before I turn to the roadmap, I want to address the recent announcements coming out of Texas. On August 3rd, Governor Abbott directed the PUCT and ERCOT to audit every data center in ERCOT's interconnection queue before approving new projects. That is a response to roughly 474 gigawatts of pending requests, about 90% of which are data centers. That mandate targets new studied loads in the interconnection queue. I want to share four points on where we, Soluna, sit. First, our direct exposure is limited. The audit targets new studied load. Roughly 146 megawatts of our capacity in Texas is already energized, and both Dorothy 3 and Kati 2 build off adjacent energized interconnections. Second, our model fits what the state is screening for.